OT:RR:BTSC:CCR H349383 KAM
Mr. Kevin S. Johnson
KJ Marine Services, LLC
9706 Chelsea Place
Mokena, IL 60448
RE: Coastwise Trade; Passengers; Bareboat Charter Agreement; 46 U.S.C. §§ 55102 and
55103.
Dear Mr. Johnson:
This letter responds to your correspondence of May 25, 2025, and supplemental materials
requesting a ruling regarding a proposed vessel bareboat charter agreement for KJ Marine
Services, LLC (“KJ Marine Services”). KJ Marine Services is a bareboat charter rental company,
operating under the name Boat Chicago Charters, established in 2021. The primary service of the
company involves offering a 2001 Sea Ray 340 Sundancer for three-to-four-hour bareboat
rentals for residents and visitors on Lake Michigan in Chicago, Illinois, during boating season,
May to October of each year. You state that KJ Marine Services holds the proper licensing
through the Illinois Department of Natural Resources as a rental boat operation, as well as valid
permits from the Chicago Park District/Westrec Marinas for recreational boat rentals. KJ Marine
Services intends to revise a Recreational Charter Agreement to offer a 2001 Sea Ray 340
Sundancer for bareboat rentals on Lake Michigan.
The subject vessel, M/Y DOLCE MARE, is a 2001 Sea Ray Sundancer 340 (“the
Vessel”). The Vessel has a Certificate of Documentation with the U.S. Coast Guard with a
recreational endorsement. The Vessel was constructed in New York, United States, although the
build year is unknown, and does not hold a coastwise endorsement.
ISSUE
Whether the Recreational Charter Agreement is a valid bareboat charter agreement.
1
LAW AND ANALYSIS
Generally, the coastwise laws of the U.S. prohibit the transportation of passengers or
merchandise between points in the U.S. embraced within the coastwise laws in any vessel other
than a vessel built in, documented under the laws of, and owned by citizens of the U.S. 1 Such a
vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be
“coastwise qualified.”
The coastwise laws generally apply to points in the territorial sea, which is defined as the
belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in
internal waters, landward of the territorial sea baseline. The Supreme Court discussed the nature
of the United States’ jurisdiction over internal waters in United States v. Louisiana, saying, in
pertinent part:
Under generally accepted principles of international law, the navigable sea is
divided into three zones, distinguished by the nature of the control which the
contiguous nation can exercise over them. Nearest to the nation’s shores are its
inland, or internal waters. These are subject to the complete sovereignty of the
nation, as much as if they were a part of its land territory, and the coastal nation has
the privilege even to exclude foreign vessels altogether. Beyond the inland waters,
and measured from their seaward edge, is a belt known as the marginal, or
territorial, sea. Within it, the coastal nation may exercise extensive control, but
cannot deny the right of innocent passage to foreign nations. 2
The coastwise laws apply to the United States, including the island territories and
possessions of the United States, with the exception of American Samoa, the Northern Mariana
Islands, and the Virgin Islands. 3 By statute, the United States extends its’ territorial jurisdiction
in Great Lakes waters all the way to the international boundary between the United States and
Canada, holding that Great Lakes waters are coastal waters “within the territorial jurisdiction of
the United States.” 4 U.S. Customs and Border Protection, and its predecessor, the U.S. Customs
Service (hereinafter collectively “CBP”), have previously determined that, as they pertain to the
Great Lakes, the territorial waters of the United States include those waters adjacent to the coast
of the United States extending to the U.S.-Canada international boundary. 5 Accordingly, it has
been the longstanding position of CBP that the coastwise laws are also applicable to the waters
of the Great Lakes. 6
1
46 U.S.C. § 55102; 46 U.S.C. § 55103.
2
United States v. Louisiana, 394 U.S. 11, 22 (1969) (Citations omitted).
3
See 46 U.S.C. §55101.
4
16 U.S.C. § 1453(1) and (3).
5
See Customs rulings HQ H113158 (Jul. 21, 1994), HQ H110056, (Feb. 13, 1989), and HQ H112023, (Dec. 23,
1991).
6
See, e.g. HQ 109815 (Dec. 5, 1988), where the “use of a non-coastwise-qualified submersible vessel in Lake
Superior for dual use in research/exploration and passenger touring” was subject to the coastwise laws.
2
The coastwise law applicable to the transportation of passengers is found at 46 U.S.C. §
7
55103 which provides, in pertinent part:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this
title, a vessel may not transport passengers between ports or places in the United
States to which the coastwise laws apply, either directly or via a foreign port, unless
the vessel-
(1) is wholly owned by citizens of the United States for purposes of
engaging in coastwise trade; and
(2) has been issued a certificate of documentation with a coastwise
endorsement under chapter 121 or is exempt from documentation but would
otherwise be eligible for such a certificate and endorsement.
U.S. Customs and Border Protection (“CBP”) Regulations, promulgated under the
authority of 46 U.S.C. § 55103, provide, in pertinent part:
(a) No vessel shall transport, either directly or by way of a foreign port, any
passenger or merchandise between points in the United States embraced within the
coastwise laws, including points within a harbor, or merchandise for any part of the
transportation between such points, unless it is:
(1) Owned by a citizen and is so documented under the laws of the United States
as to permit it to engage in the coastwise trade; …. 8
(emphasis added).
Similarly, 19 CFR § 4.80a(b) provides, in pertinent part:
The applicability of the coastwise law (46 U.S.C. § 55103) to a vessel not
qualified to engage in the coastwise trade (i.e., either a foreign-flag vessel or a
U.S.-flag vessel that is foreign-built or at one time has been under foreign flag)
which embarks a passenger at a coastwise port is as follows:
(1) If the passenger is on a voyage solely to one or more coastwise ports and
the passenger disembarks or goes ashore temporarily at a coastwise port,
there is a violation of the coastwise law.
(2) If the passenger is on a voyage to one or more coastwise ports and a
nearby foreign port or ports (but at no other foreign port) and the passenger
disembarks at a coastwise port other than the port of embarkation, there is a
violation of the coastwise law.
(3) If the passenger is on a voyage to one or more coastwise ports and a
distant foreign port or ports (whether or not the voyage includes a nearby
foreign port or ports) and the passenger disembarks at a coastwise port, there
7
Recodified by Pub. L. 109-304, enacted on October 6, 2006.
8
19 C.F.R. § 4.80.
3
is no violation of the coastwise law provided the passenger has proceeded
with the vessel to a distant foreign port.
In its administration of 46 U.S.C. § 55103, CBP has consistently held that the carriage of
passengers entirely within territorial waters, even though the passengers disembark at their point
of embarkation and the vessel touches no other coastwise point, is considered coastwise trade
subject to the coastwise laws. 9 Passengers are defined as, “any person carried on a vessel who is
not connected with the operation of the vessel, her navigation, ownership, or business.” 10
With respect to chartering, maritime law recognizes three types of charterparties, the
voyage charter, the time charter, and the demise or bareboat charter. The United States Supreme
Court has stated that to create a bareboat charter, the owner of the vessel must completely and
exclusively relinquish “possession, command, and navigation” thereof to the demisee, and that
anything short of such an outright transfer is a time or voyage charter party or not a charter party
at all. 11 One court describes the differences between the three types of charter parties as such:
In a voyage charter the ship is engaged to carry a full cargo on a single voyage. The
owner retains all control over the vessel. In a time charter the ship's carrying
capacity is taken by the charterer for a fixed time for the carriage of goods on as
many voyages as can fit into the charter period. Again, the owner retains all control
for management and navigation. In a demise or bareboat charter, the charterer takes
over full control of the ship and becomes the owner pro hac vice. The charterer thus
assumes control of management and navigation. 12
CBP has consistently held that when a vessel is chartered under a bona fide bareboat
charter, the bareboat charterer is treated as the owner pro hac vice of the vessel for the period of
the charter, and, because the owners are not considered “passengers” for the purposes of the
coastwise laws, the charterer is not prohibited by the coastwise laws from using the vessel during
the period of the charter for pleasure purposes only. 13 A non-coastwise-qualified vessel chartered
under a charter arrangement other than a bareboat charter (e.g., a time or voyage charter) and
used in coastwise transportation would be subject to penalties under the coastwise laws. A non-
coastwise-qualified vessel chartered under a bareboat charter would also be subject to penalties if
the bareboat charterer used it in the coastwise trade (e.g., to transport passengers, other than bona
fide guests, between coastwise points or entirely within territorial waters). 14
In the instant matter, we consider whether the Recreational Charter Agreement proposed
9
See e.g., HQ H014892 (Aug. 17, 2007); HQ H113379 (Mar. 23, 1995); and 29 Opinions of the Attorney General
318; and see Demarest v. United States, No. 25-10001-CIV-GAYLES/SANCHEZ, 2026 LX 127579 (S.D. Fla. Feb.
24, 2026).
10
19 C.F.R. § 4.50(b).
11
Guzman v. Pichirilo, 369 U.S. 698, 699-670 (1962); see also, Leary v. United States, 81 U.S. 607, 611 (1871); 2B
Benedict on Admiralty § 52 (6th Ed. 1990).
12
Dougherty v. Navigazione San Paolo, S.P.A., 622 F. Supp. 1, 3; 1984 U.S. Dist. LEXIS 25016, also citing G.
Gilmore and C. Black, The Law of Admiralty 193-94 (2d ed. 1975).
13
HQ H331733 (Jan. 22, 2024).
14
HQ H226808 (Jun. 7, 1996), citing HQ H106049 (Apr. 26, 1983); see also, HQ H300963 (Nov. 7, 2018), HQ
H116183 (Apr. 5, 2004).
4
by KJ Marine Services is a valid bareboat charter agreement. The Recreational Charter
Agreement is divided into thirteen provisions, which we will address in turn.
The first provision outlines the parties, the Charterer and the Owner, and the Charterer’s
responsibility to keep the Vessel in good condition, while complying with applicable laws and
regulations. The provision also states that the Charterer will be responsible for any damage done
to the Vessel upon return inspection. It is our position that such a provision indicates the intent to
establish a bareboat charter agreement by shifting financial liability to the Charterer.
Additionally, requiring the Charterer to follow the laws of the locality has strong public policy
reasons outweighing the level of control the owner has engaged in maintaining by prohibiting
such actions. 15
The second provision states that the Charterer is not responsible for repairs to the Vessel
unless in the case of negligence or willful misconduct, although the Charterer is responsible for
maintaining the vessel in good order and condition. It places responsibility for all other repairs
and compliance with laws on the Owner. Acceptance of these terms by the parties indicates
intent to have the Charterer assume complete management and control of operational expenses
for the Vessel during the term of the charter, and the Owner maintains an overarching
responsibility of longer-term requirements which extend beyond the charter timeframe.
The third and fourth provisions outline minimum operator requirements including a valid
United States Coast Guard Captain’s License and familiarity with the Vessel. The Charterer is
responsible for selecting the captain and crew, although the captain selection is subject to Owner
approval. The provision also states that the captain and crew shall, “at all times be under the total
and exclusive control of the [V]essel, and not the OWNER.” The fourth provision similarly
states that the Charterer is responsible for operation and management of the Vessel. It further
stipulates that the captain and crew members shall be under the exclusive control of the
Charterer, even if the crew members are furnished by the Owner.
The employment and control of the vessel’s master and crew are significant factors in
determining whether a demise or bareboat charter is created. The U.S. District Court for the
Eastern District of New York remarked that the customary practice in bareboat chartering is for
the charterer to provide the master and crew, saying, “[u]sually, the shipowner is not required by
the terms of the demise charter to furnish a crew, and so the charterer gets the 'bare boat'; hence
the term 'bareboat' charter.” 16 The Supreme Court advises us, however, that the essential element
of consideration is control of the captain and crew when it said, “…the fact that the Captain is
employed by the owner is not fatal to the creation of a demise charter party, for a vessel can be
demised complete with captain if he is subject to the orders of the demisee during the period of
the demise.” 17
We have generally held that a charter arrangement in which the captain and crew are
selected by the owner or his agent and not by the charterer, by its very nature results in an
implication that the owner may not have relinquished complete management and control of the
15
See, e.g., HQ H008709 (Jun. 18, 2007), citing HQ H226808 (Jun. 7, 1996).
16
Charles Hill vs. Standard Fruit and Steamship Company, 1973 AMC 1142 (E.D.N.Y. 1973).
17
Guzman v. Pichirilo, 369 U.S. 698, 701.
5
vessel to the charterers. 18 In contrast, the provision here that requires the Captain and crew to be
approved by the Owner, as opposed to selected by the Owner. Therefore, this does not
necessarily negate a determination that this Recreational Charter Agreement is a bareboat
charter.
The fifth, sixth, and seventh provisions confirm that the Charterer shall indemnify,
defend, and hold harmless the Owner and all its agents from any claims, damages, expenses, or
liabilities arising out of the performance of the Agreement, as well as the United States Coast
Guard, Illinois Department of Natural Resources, conservation police, or other governing
agency. These provisions further indicate the Owner’s intent to relinquish operational control
and management of the Vessel to the Charterer.
The eighth provision states that the Charterer shall have no rights, power, or authority to
create, incur, or permit liens upon the Vessel. Further, the provision holds that all fuel, food, and
stores should be paid for by the Charterer. The provision against incurring maritime liens is not
antithetical to the validity of a bareboat charter agreement. 19 Additionally, we note that the
provisions regarding shared proceeds do not direct the Charterer to engage in a derelict, salvage,
or towing activity, nor do the provisions prohibit the Charterer from engaging in those activities
should the Charterer decide to do so. Accordingly, we determine that this provision is not
inconsistent with the complete and exclusive relinquishment of possession, command, and
navigation of the Vessel to the Charterer.
The ninth and tenth provisions deal with termination. The ninth provision prescribes that
the Charterer shall not sub-charter or assign the charterparty without consent of the Owner.
Further, this provision outlines that procedure should the Charterer fail to remedy any default
concerning any of the provisions, including the right of the Owner to terminate the Charter. The
tenth provision states that the Owner is not responsible for failure to deliver the vessel if there
are exigent circumstances, but that termination may be initiated by either party, if so. Such
provisions have no bearing on whether the agreement is a valid bareboat charter.
The eleventh provision requires that the Charterer shall follow the Coast Guard Marine
Safety Unit guidance, including the provision that no passengers for hire shall be transported.
The Charterer also agrees to follow the Chicago harbor Rules of Conduct & Party Guidelines. A
requirement that the Charterer not carry passengers for hire could be interpreted to indicate that
the owner may not intend to fully relinquish possession and command of the vessel. However, if
the Charterer carried merchandise or passengers for hire or engaged in commercial photo or film
shoots, the vessel would be engaged in coastwise trade which accordingly would invalidate a
bareboat charter in a recreational context. Accordingly, it is our position that this part of this
charterparty indicates an intent to establish a bareboat charter agreement. Additionally, requiring
the Charterer and guests to follow the laws of the locality has strong public policy reasons
outweighing the level of control the owner has engaged in maintaining by prohibiting such
actions. 20
18
HQ H300963 (Nov. 7, 2018); HQ H226808 (Jun. 7, 1996) and HQ H114314 (May 7, 1998).
19
See HQ H300963 (Nov. 7, 2018), HQ H226808 (June 7, 1996).
20
See, e.g., HQ H008709 (Jun. 18, 2007), citing HQ H226808 (Jun. 7, 1996).
6
The twelfth provision simply states that the Charterer and Owner agree to arbitration in
lieu of litigation, should it arise. Such a provision has no bearing on whether the agreement is a
valid bareboat charter.
Finally, the thirteenth provision relinquishes all possession, command, control,
management, and navigation of the vessel from the Owner to the Charterer. It emphasizes that
the Charterer is responsible for injury, death, property damage, or Acts of God that may occur.
This indicates the owner’s intent to “completely and exclusively relinquish” command of the
vessel. There is a presumption against finding that a charterparty constitutes a bareboat charter
unless the language of the document reveals a clear-cut intention to the contrary. In Christian v.
Bullock, a case involving a bareboat charter of a yacht, the Supreme Court of Virginia stated,
“[a] presumption exists that a charter party is not a demise, and an owner who seeks to escape
liability thereby has the burden of establishing that the charter was a demise.” 21 Also, “[c]ourts
are not inclined to regard the contract as a demise of the ship if the end in view can conveniently
be accomplished without the transfer of the vessel to the charterer. Even where words of demise
are used, yet it must appear that the instrument taken as a whole was intended to operate as such
or it will not be so construed.” 22 In the present matter, the terms of the provision indicate an
intent to establish a bareboat charter. The use of the term “Recreational Charter” in this provision
indicates that KJ Marine Services, LLC intends to create such a charter. Furthermore, the
provision also states that the Charterer shall be solely responsible for the boats during each
occasion of use. KJ Marine Services, LLC clearly intends to place responsibility and liability on
the Charterer through the Recreational Charter, thereby shielding itself from responsibility.
Accordingly, our analysis of the Recreational Charter Agreement leads us to conclude
that although some of the covenants contained therein suggest that the owner is directing some
actions and not relinquishing total control of the vessel, such as the third and fourth provision,
they do not preclude a determination that the Recreational Charter Agreement is a valid bareboat
charter agreement. While the inclusion of a provision that requires the Captain and crew to be
approved by the Owner, in its sole discretion, could possibly negate a determination that this
Recreational Charter Agreement is a bareboat charter, in the instant matter, the provision only
requires approval from the Owner and not require furnishing of the master and crew by the
Owner. Consequently, we find that the Recreational Charter Agreement is a valid bareboat
charter agreement for purposes of the coastwise laws administered by Customs and Border
Protection.
HOLDING
The Recreational Charter Agreement submitted for our review is a valid bareboat charter
agreement for purposes of the coastwise laws. Operation of the Vessel herein pursuant to the
Recreational Charter Agreement would not be a violation of the coastwise laws.
21
Christian v. Bullock, 215 Va. 98, 102, 205 S.E.2d 635 ** | 1974 Va. LEXIS 238 ***
22
Saridis v. S.S. Paramarina, 216 F. Supp. 794, 797, citing, Reed v. United States, 11 Wall. 591, 78 U.S. 591, 20
L.Ed. 220. Cf. United States v. Shea, 152 U.S. [**8] 178, 14 S.Ct. 519, 38 L.Ed. 403; Ruiz Pichirilo v. Maysonet
Guzman, 1 Cir., 290 F.2d 812; Vitozi v. Balboa Shipping Co., 1 Cir., 163 F.2d 286.
7
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the
assumption that all of the information furnished in connection with the ruling request and
incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and
complete in every material respect. The application of a ruling letter by a CBP field office to the
transaction to which it is purported to relate is subject to the verification of the facts incorporated
in the ruling letter, a comparison of the transaction described therein to the actual transaction,
and the satisfaction of any conditions on which the ruling was based.” If the facts at hand vary
from the facts stipulated to herein, this decision shall not be binding on CBP as provided for in
19 C.F.R. § 177.2(b)(1), (2), and (4), and § 177.9(b)(1) and (4).
Should you have any further questions on this matter, you may contact Kelsey Myers, of
my staff at (202) 325-1025, or [email protected] .
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted
Merchandise Branch
Office of Trade; Regulations and Rulings
U.S. Customs and Border Protection
8